News tagged as 'Warren Buffet'

Buffett and His Secretary Can’t Get Their Story Straight on Taxes

By: Michael_Patrick_Leahy

Chalk this up as the first strategic blunder of the Obama campaign. The poster-child of their class warfare narrative, Warren Buffett’s secretary, has just made a tax claim that, if true, reveals her to belong in the top 1% of income earners in America.

The Obama campaign communications team–in this case, ABC News–joined forces this evening with Warren Buffett and his secretary, Debbie Bosanek, to selectively release some information about their personal tax returns. Note that neither Mr. Buffett nor Ms. Bosanek took the transparent approach of  releasing their complete tax returns for the past four years for review by the entire public, as I called on them to do yesterday.

Here’s what they claimed in the ABC  report: “Bosanek pays a tax rate of 35.8 percent of income, while Buffett pays a rate at 17.4 percent.”

It’s hard to interpret this statement without additional information. Do they mean “effective tax rate” or “marginal tax rate” ?

When they say “income,” do they mean total gross income or taxable income?

Since the top marginal rate on taxable income (which kicks in when taxable income exceeds $379,150) is 35%, it’s impossible that Ms. Bosnak’s claim that she pays a tax rate of 35.8 % applies to her taxable income. Since taxable income is always less than total gross income, the claim is even less credible for that measure.

Despite these factual inconsistencies, Bosanek doubled down, putting herself forward as the face of Obama’s tax inequality mantra:

I just feel like an average citizen. I represent the average citizen who needs a voice…Everybody in our office is paying a higher tax rate than Warren.

If she’s really paying a marginal rate of 35%, she’s earning over $379,150 per year in taxable income, which places her in the top 1% of income earners nationally. If this is true, Ms. Bosanek is anything but an average citizen. An average citizen–say someone who earns the median salary of a secretary to a CEO, which is $67, 791, according to a 2011 survey conducted by Certified Compensation Professionals–pays a much lower effective tax rate on taxable income than Ms. Bosanek. Assuming this average citizen took about $15,000 in deductions, she would pay an effective tax rate of 17% on taxable income of $52,791, the same rate Mr. Buffett claims to be paying.

Whether Ms. Bosanek is in fact in the top 1% of earners, or her claims, along with those of Mr. Buffett, are simply not correct is something no one will know for sure until both Ms. Bosanek and Mr. Buffett release their personal tax returns for the last four years.

In either case, as the story continues to unfold it will be painfully obvious to most voters that the Obama campaign’s attempt to portray Ms. Bosanek as the sympathetic face of tax inequality has backfired badly.

Michael Patrick Leahy is the editor of the Voices of the Tea Party e-book series, co-founder of the Nationwide Tea Party Coalition, and co-organizer of Election Day Tea Party 2012. His new book,Covenant of Liberty: The Ideological Origins of the Tea Party Movement, will be published by Broadside Books in spring, 2012. He can be reached on Twitter at @michaelpleahy .

Time for Warren Buffett and his Secretary to Release Their Personal Tax Returns

By: Michael_Patrick_Leahy

The political theater of the Obama Administration continues at this evening’s State of the Union Address. Debbie Bosanek, Warren Buffett’s personal secretary–you know the woman who has become the poster-child for President Obama’s attacks on the “unfairness” of the not progressive enough tax code–will be seated in the  First Lady’s box this evening. Buffett has repeatedly lectured to us about a tax code in which his secretary pays a higher tax rate than he does.

Ms. Bosanek, who until recently had only been thrust into the public dialogue over “fairness” and redistribution by her publicity seeking and political favor hunting boss (note how his Burlington Railroad company benefits financially from the President’s decision to halt the Keystone Pipeline) has now thrust herself into the national debate.

Fair enough.

Now that she’s voluntarily participating in the public arena, I call on both Ms. Bosanek and Mr. Buffett to release their own personal tax returns for the past four years. Let’s see what their tax rates really are. This is an important political argument that will be a central theme of the Obama campaign for the rest of the year. Having made the claim on behalf of the Obama campaign, it’s time for Mr. Buffett and Ms. Bosanek to demonstrate its veracity.

I suspect we’ll find that Mr. Buffett has benefited significantly from his own lobbying of Congress. And I’m curious to see exactly how much higher Ms. Bosanek’s tax rate is than Mr. Buffett’s.

The analysis of their personal tax returns is likely to be highly educational for the entire country.

Michael Patrick Leahy is the editor of the Voices of the Tea Party e-book series, co-founder of the Nationwide Tea Party Coalition, and co-organizer of Election Day Tea Party 2012. His new book,Covenant of Liberty: The Ideological Origins of the Tea Party Movement, will be published by Broadside Books in spring, 2012. He can be reached on Twitter at @michaelpleahy .

 

 

Another Billionaire Offers the Country Unsolicited Political Advice

By: Michael_Patrick_Leahy

I like Howard Schultz, the billionaire who created the Starbucks chain from scratch.

I like Starbucks stores, and will occasionally spend some of my hard earned money on the over priced coffee and baked goods sold there. It’s an indulgence, I know, but I like the community atmosphere in the stores.

I used to buy Starbucks Coffee at our local grocery store, but I’ve switched recently. I got tired of paying $10 for eleven ounces of quality coffee when about $4 of that price was simply for the brand.  I’ve found another brand for $6 and, to my taste buds, it’s just as good as Starbucks.

Now Mr. Schultz has decided to offer the country two pieces of political advice.

1. He’s asking everyone to forego their Constitutional rights to free speech by boycotting donations to all Congressional and Presidential candidates until our national debt issue is properly resolved.

2. He’s asking his fellow employers to start hiring new employees, not because the company needs them, but because the country needs fewer unemployed.

This sort of business “voluntarism” was popularized by Herbert Hoover back in the 1920s and early 1930s. Its likelihood of success is as limited today as it was back then.

What Mr. Hoover forgot then, and what Mr. Schultz forgets now, is that our country’s political and economic system is based on the idea of individual liberty. Efforts to limit that liberty–whether undertaken through ”persuasion” of the sort advocated by Hoover and Schultz–or through the heavy hand of government regulations–are entirely contrary to our tradition. 

Mr. Schultz is certainly welcome to exercise his right to free speech and express any political or economic ideas he wishes. But please, Mr.Schultz, don’t try to coerce me or any other American to refrain from exercising our rights to contribute to any political candidate that strikes our fancy simply because you think it’s a good idea.

This surplus of public policy advice from billionaires lately could inspire another Voices of the Tea Party e-book. I would title it “Top Ten Bad Public Policy Ideas from America’s Billionaires.” In addition to offerings from Mr. Buffet and Mr. Schultz, we could add thoughts from billionaires on opposite ends of the spectrum–George Soros and Donald Trump.

Just as Mr. Buffet would be well advised to stick to what he knows best–buying family businesses faced with high inheritance taxes at bargain prices–Mr. Schultz would be well advised to stick to what he knows best–selling coffee.

As a customer, I have a suggestion for him. If he lowers his prices, I’ll buy more Starbucks Coffee. Now, that’s what I call economic stimulus!

Michael Patrick Leahy is the editor of the Voices of the Tea Party e-book series and co-founder of Top Conservatives on Twitter and the Nationwide Tea Party Coalition. His new  e-book, I, Light Bulb: A Death Row Testimonial, was published earlier this week. His new book, Covenant of Liberty: The Ideological Origins of the Tea Party Movement, will be published by Broadside Books in spring, 2012. He can be reached on Twitter at @michaelpleahy .

Warren Buffet Takes a Page from Gerard Swope’s Plan

By: Michael_Patrick_Leahy

When captains of industry and billionaires offer pronouncements on public policy, their opinions often receive attention out of proportion to their merits. These wise sages must know what they’re talking about, mainstream media pundits argue. After all, they’ve succeeded financially far beyond the rest of us. The same skills that brought them wealth ought to be applicable to public policy, right?

To the contrary.

The acquisition of wealth demonstrates the exercise of skill, perseverance, and perhaps a tad of good fortune. It means that the achiever has a very deep, but narrow knowledge in one area of business endeavor.

Buffet, a savvy investor whose net worth is estimated in the vicinity of $45 billion, tells us that the wealthy should pay more in taxes.  But as Tim Carney and Dan Mitchell point out, his knowledge may be deep, but it’s narrow to the point of parochialism.

Carney, in today’s Washington Examiner, points out that Buffet benefits from the current estate taxes because he focuses on purchasing family businesses faced with high estate taxes. In addition, Buffet benefits from high levels of federal government spending.

Mitchell points out that Buffet, at least as it relates to public finance, is fiscally innumerate.

Buffet’s pronouncement reminds me of Gerard Swope, at the time the President of General Electric, who 80 years ago offered his own solution to the economic decline of the Great Depression. In a September 1931 speech to the National Electrical Manufacturers Association (yes, the same trade association that 75 years later successfully lobbied for the ban of the current generation of incandescent light bulbs) Swope proposed his plan to abolish antitrust laws, cartelize every industry in the country through industry associations dominated by the big companies, establish price and wage controls, and develop and enforce industry codes of conduct. Known as “The Swope Plan,” it became the model for FDR’s ill fated 1933 National Industrial Recovery Act.  The famed attorney Clarence Darrow, who investigated the National Recovery Administration a year later, would conclude that the massive number of “business codes” authorized in that law were designed to benefit the large companies at the expense of small companies.

The wealthy and powerful Swope didn’t understand something very important about that law. Four small businessmen in Brooklyn–Joseph, Martin, Aaron, and Alex Schechter–the owners of Schechter Poultry instinctively knew it. Fred Perkins, a small businessman who along with his crew of ten employees,  manufactured batteries in York, Pennsylvania, knew it, as this 1935 newsreel shows.  Swope and FDR each had net worths easily 1,000 times greater than the Schechters or Perkins. Our constitution, they knew, guaranteed the exercise of individual liberty in the conduct of their own business.

But the Schechters and Fred Perkins were right about the law. And in May, 1935, the Supreme  Court unanimously agreed with them that the National Industrial Recovery Act was unconstitutional.

So the next time Warren Buffet offers some public policy advice to the rest of us, remember this–his net worth may be orders of magnitude greater than ours, but, unlike Mr. Buffet, we understand the constitutional principles upon which this country is based. And we don’t conflate “self-interest, rightly understood” with self interest covered with a thin veneer of do-goodism.

Michael Patrick Leahy is the editor of the Voices of the Tea Party e-book series and co-founder of Top Conservatives on Twitter and the Nationwide Tea Party Coalition. His new  e-book, I, Light Bulb: A Death Row Testimonial, was published earlier this week. His new book, Covenant of Liberty: The Ideological Origins of the Tea Party Movement, will be published by Broadside Books in spring, 2012. He can be reached on Twitter at @michaelpleahy .